I understand that a share of stock represents a share of ownership in a company. But if dividends are not paid, what is the actual value of that stock? Why does it have value? The company making more money does not flow to me because I own the stock. So is it basically just like owning a baseball card in that if the player (company) does well more people want to collect (own) their cards (stock) and this the price goes up?
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The stock does not pay dividends *today*. But it is generally expected to *eventually* pay dividends.
Historically, it is common for companies to start with no dividends during a “growth phase”, then (assuming they don’t fail outright) for them to finish “growth” and enter a “stable” period. During the “stable” period they begin to pay out dividends to stock owners.
There are also other types of payouts that aren’t called “dividends” but function similarly – stock buybacks, for example, are larger lump-sum payouts instead of ongoing smaller payouts.
For reference on how common this is: of the S&P 500 – the “top” 500 companies by a certain standard measure – nearly 400 pay dividends.
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